Two Rivals: Acorns and Robinhood
Robinhood succeeded in shaking up the investing world with its zero-commission policy. But it
hasn’t adopted many of the services that Acorns is offering. Could Acorns be the next revolution?
Take a look at this:
Cost
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
|
Acorns
|
na
|
na
|
na
|
$3-$5 per month
|
$3-$5 per month
|
|
Robinhood
|
$0
|
na
|
$0 per contract
|
$0
|
$0
|
Services
| Broker Review |
Cost |
Investment Products |
Trading Tools |
Customer Service |
Research |
Overall Rating |
|
Acorns
|
|
|
|
|
|
|
|
Robinhood
|
|
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Promotions
Acorns:
Get $20 when you open an Acorns account with this referral link.
Robinhood: Up to $200 in FREE stock + transfer fee reimbursement.
First, Let’s Explore Investing Styles
Acorns:
Acorns sells portfolio management via its robo service. Unlike other robo advisors, Acorns doesn’t charge a percent-based fee. Instead, it assesses a flat fee each month (a dollar to five dollars), and this service charge includes the portfolio management plus some other services that are available under specific plans:
- Round-Ups with linked bank cards
- Bonus shares for shopping with select companies
- Banking features with an Acorns debit card
- Financial advice
- Custodial accounts
There is no self-directed trading at Acorns. Inside any robo account, Acorns’ digital advisor buys and sells a small selection of exchange-traded funds (just 12 of them right now).
Robinhood:
Robinhood only provides self-directed trading at this time. The broker-dealer does not have any managed accounts, nor does it offer many of the services that Acorns provides, including round ups, financial advice, and custodial accounts. It does have a debit card, although there is no round-up program.
Robinhood customers do get to trade a much larger selection of assets compared to Acorns. These include:
- All listed ETF’s (more than 2,000 total)
- Cryptocurrencies (just 7 right now)
- Equities
- Option contracts
Winner: Debatable
Second, Let’s Examine Margin Borrowing
Robinhood:
Robinhood offers margin accounts, but because it’s Robinhood, these will of course be different
than old-school margin accounts.
Robinhood calls its margin service Robinhood Gold. There is a $5 monthly fee (whether you use
margin or not), and this fee covers multiple services including Level II quotes, the first $1,000
of borrowing, Morningstar research,
etc. Loans above $1,000 cost a very low 7.5%.
Acorns:
Margin is not available in any form at Acorns (remember, it is a robo-only firm).
Winner: Robinhood
Next, Let’s Analyze the Two Brokers’ Websites
Robinhood:
For account management, asset research, and trade placement, Robinhood offers its customers a simple but effective website. During our trial of the site, we found it easy to use.
A good place to begin is the search bar at the top of the site. Just type in anything you’re interested in trading, and the site will deliver matching assets, whether that be General Electric or Dogecoin.
The site also has a default watchlist on the right-hand side. Entries can easily be deleted or created. New lists can be added and deleted as well.
Clicking on an entry in a watchlist or in the top search bar will produce the asset’s profile. A medium-sized chart appears at the top of the page, and this chart can be expanded to full size (click on the expand icon in the lower-right corner of the graph).
In full-screen mode, there are two display choices (line format and candlesticks) and four technical indicators (MACD, moving average, exponential moving average, and RSI). Disappointingly, there are no other tools.
Robinhood’s order form is easy to use, which makes it a good choice for beginners who want to try their luck with self-directed trading. There are multiple order types, with market and limit being the simplest.
Option chains don’t display by default on a security’s profile. Instead, the user must click on an options button (it appears below the stock order ticket). Robinhood’s software displays chains differently than normal chains (Robinhood always has to be different). During our testing of this unique system, we found it easy to learn. We simply selected put or call and buy or sell and then clicked on the contracts we wanted to add to an order ticket.
Robinhood recently added profit-loss diagrams to its options trading platform, and this makes visualizing maximum loss and gain levels very easy. Breakeven points are also shown on Robinhood’s P/L graph, which is color-coded with red areas showing loss and green areas for gains.
Acorns:
Because Acorns only delivers robo investing, there are no self-directed trading tools to speak of. The Acorns site does have some decent account management tools. For example, we found widgets for tracking round-ups, activating the Acorns debit card, and estimating future account growth.
There is a nice tool to find extra cash back from participating retailers (the cash is deposited into the primary investing account). For example, on the day we did our research, Best Western was offering 5% back, while McDonald’s was offering $0.25.
Winner: Robinhood
Fourth, Let’s Have a Look at Mobile Apps
Robinhood:
Another convenient self-directed platform will be found on Robinhood’s mobile app. During our testing of it, we found it very intuitive with most of the same features the website has (minus profit-loss diagrams for options trading). Order tickets for derivatives and stocks/funds are available with the same trade types.
But charting is much worse, with only vertical format and zero tools. There is no vertical axis, so it’s not possible to look at price history, only price movement. Although candlestick format can be selected, there’s no point in using it because the chart is so small.
Acorns:
Once again, Acorns’ software isn’t designed for self-directed trading. Although we didn’t care for Robinhood’s mobile charts, Acorns has none at all. And of course, there are no trading tickets, either. As with the website, Acorns’ computerized investing service automatically sends deposits and spare change into the account’s 12-ETF portfolio, so there are no trades to place.
The Acorns app does not have streaming video news or other advanced features, but then again, neither does the Robinhood app.
Winner: Robinhood
Fifth, Let’s See Who’s Better at Education and Research
Robinhood:
Robinhood has a good educational library at learn.robinhood.com. As the URL suggests, this is a good place for newbies to pull up a chair and a cup of coffee and start learning. During our investigation, we counted hundreds of articles on a wide variety of financial topics (not just investing and trading). Examples include:
- What is a Health Maintenance Organization (HMO)?
- What is Liquidity?
- What is Dividend Payout Ratio?
Finding potential investments at Robinhood isn’t the easiest endeavor for the simple fact that the broker-dealer doesn’t have a security screener. It’s best to know beforehand what you want to invest in with a Robinhood account.
Asset profiles have basic information like price ratios and earnings history. Analyst recommendations are huge bonuses on major stocks.
Acorns:
Acorns also has an extensive library of educational materials. Split into two sections (Grow and Acorns Money Basics), the company covers many topics. Thanks to a partnership with CNBC, Acorns has videos as well.
Examples of pieces we found include:
- How Old Do I Have to Be to Invest?
- How Many Credit Cards Should I Have?
- I paid off almost $200,000 of student loans in 3 years: Here are my top tips
Acorns fails to offer any asset profiles on its website or mobile app.
Winner: Robinhood
Sixth, Let’s Look at Additional Services
Dividend Reinvestment Program: Available at both firms.
Fractional-share Trading: Also available at both brokers.
Extended Hours: Only Robinhood provides trading before the market opens and after it closes.
Banking Tools: Both firms have debit cards, but Acorns charges $3 a month for its card. Acorns customers get a nationwide network of 55,000 fee-free ATM’s, while Robinhood boasts more than 75,000.
IPO Availability: Robinhood, but not Acorns, offers access to looming Initial Public Offerings.
IRA’s: Acorns, but not Robinhood, has retirement accounts.
Winner: Robinhood
Now It’s Time to List Our Recommendations
Small Accounts: Robinhood.
Stock/ETF Trading: Robinhood is really the one choice on this one.
Beginners: Robinhood has simple tools designed for new investors, although Acorns’ robo service is probably the better choice.
Long-Term Investors and Retirement Savers: Acorns is the only brokerage firm in this survey with a retirement saving plan.
Promotions
Acorns:
Get $20 when you open an Acorns account with this referral link.
Robinhood: Up to $200 in FREE stock + transfer fee reimbursement.
Acorns vs Robinhood Assessment
Acorns looks pretty good for beginners and retirement savers. For actual trading, Robinhood is
the top broker here.
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Updated on 12/27/2022.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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